Investment in Automation and remote work technologies can help organisations achieve new post-COVID-19 goals
CIOs who are driving financial services digital business strategy and innovation must align with business leader priorities to ensure a coordinated COVID-19 response and recovery, according to Gartner, Inc. Automation and technologies to sustain and improve remote work are two investment areas that will help financial services organizations achieve new business goals.
“Financial services CIOs moved quickly to respond to the immediate impact of the COVID-19 pandemic by addressing the needs of their teams as they moved to remote work, or, for employees considered “essential,” ensured that they had the proper equipment and physical space,” said Nicole Sturgill, research vice president at Gartner. “Now, in order to successfully reset and emerge from this crisis, it’s critical that these CIOs align their next steps with business executive leadership’s strategy.”
The Gartner 2020 Financial Services COVID-19 Pulse Survey asked financial services business leaders and CIOs what they considered to be strengths and weaknesses as they responded to the crisis. Over half of business leaders indicated that technology infrastructure was a weakness, compared with just 20 per cent of financial services CIOs.
“This disconnect will be an ongoing, perhaps even growing, challenge if left unaddressed,” said Sturgill. “CIOs must take immediate action to understand why business leaders felt that technology was a weakness. Their answers can provide the path forward for which new technology investments need to be prioritised.”
Sixty-five percent of financial services CIOs surveyed plan to increase spending on infrastructure technologies such as APIs, microservices and cloud in the coming year, and over half plan to invest in automation that reduces the need for high-touch processes and contributes to cost optimisation. “Both business leaders and CIOs demonstrate a shared interest in automation technologies, so it’s clear that this area will be a key priority for financial services organisations post-COVID-19,” said Sturgill.
A Forbes/VMware report found financial services CIOs already enjoy considerable responsibility and power. Seven in ten (76 per cent) survey respondents are both key decision makers on corporate strategy, and report directly to the CEO. More than three-quarters (77 per cent) also say they are the primary decision makers for corporate acquisitions, highly significant in today’s heated market to acquire pre-IPO fintechs. Interestingly, CIOs in financial services expect their authority to increase even further. More than half (56 per cent) believe they will head a profit centre within five years.
This makes sense in an industry encouraging its leaders to identify new business models—and revenue streams—to better serve customers, empower employees, and increase efficiencies in the back office. Financial services CIOs will be responsible for delivering new digital payment services, new types of financial instruments, mobile applications, and other digital processing innovations.
Indeed, 59 percent of financial CIOs surveyed believe technology will drive “large” or “very large” changes in product development within their organisations. Big data and advanced analytics already impact operations—from preventing fraud to assessing risk when vetting potential customers to devising personalised offers. CIOs expect to have increasing influence in these areas. When it comes to sales and marketing, where data is now king, significant proportions of financial services CIOs say they will have stronger relationships with the executives leading those two important functions (64 percent and 55 percent, respectively).
In the short-term, Gartner recommends CIOs create a priority map that draws a clear line between business and IT goals and identifies how such technologies will help achieve each goal. In the long-term, financial services CIOs can proactively prevent future gaps by engaging business partners in prioritization sessions early and often and by clearly articulating which investments will make them more resilient as an organisation.
“Fixing what’s broken will always be a near term priority for CIOs but planning ahead, while harder in uncertain times, is critical to securing the future success of the organization. CIOs should create a structure to gather business imperatives on a regular basis, both through direct conversation with business leaders and line-of-business stakeholders, and through coordinated planning sessions and documents,” said Ms. Sturgill.
*The Gartner 2020 Financial Services COVID-19 Pulse Survey was conducted online between April 8 and April 24, 2020 among business and IT leaders from various lines of business across financial services. The total sample included 52 responses from the business leaders and 23 responses from the banking and investment IT leaders.
Additional information on how to drive your organization through the coronavirus disruption is available in the Reset your business strategy section on gartner.com. Complimentary research, insights and webinars are offered to help leaders build resilience on their path to business recovery.
A Forbes/VMWare report found that to stay ahead, financial services CIOs must continue to aggressively adopt emerging technologies such as artificial intelligence (AI), machine learning (ML), and Internet of Things (IoT), as well as prepare to guide their organisations through enormous cultural shifts arising from deploying nascent technology.
However financial services CIOs are also adamant about several specific social concerns. They believe CIOs will be pivotal in helping their organizations succeed in navigating socio-economic issues over the next 5 years, including ensuring privacy for individuals (71 percent) and easing the digital divide in young peoples’ educations (62 percent).
Recent disclosures about personal data and information being used improperly across commerce, government, and social realms have the potential to sour consumers on technology. CIOs are acutely aware of this situation and feel social and moral obligations to respond. Only 10 percent of financial services CIO respondents view themselves as solely responsible to support the profitability of their organisations.
An overwhelming majority of financial CIOs (71 percent) believe they should avoid using technology that does harm. Yet just as many (71 percent) believe they should do more—that they should harness technology for social good.
To become a financial services CIO of 2025 requires championing change and increasingly driving revenue as technology becomes more and more important to the strategic positioning of their organisations. These executives must master the deployment and management of emerging technologies to identify new business opportunities, take responsibility for introducing new products and services, and become accountable for generating revenue through them. They also must continue to thwart cyber attackers while protecting the privacy and security of customer data and financial records—all while helping drive corporate social responsibility.
“Financial services CIOs must simultaneously champion technology change and undergo personal transformations into leaders aligned with business stakeholders and board of directors, capable of navigating through uncertain economic and technological waters,” states the report. “Proof that financial services CIOs are ready to embrace opportunity, half of CIOs (50 percent) expect to be CEOs by 2025.”